Re: if you stop to think about pc's coming off of their leases, what do you do with them?
To date, Dell has donated or scrapped them. However, with their growth and the growth of leases through Dell Financial Services, they
may have quite a few units to deal with today, and more tomorrow.
A recent article also stated they would sell 3d party PC's as well. Does this mean we could see Compaq systems for sale on Dellauction.com? It stands to reason that as Dell wins new accounts, they go in and recover obsolete systems from multiple vendors.
My original premise was based on systems 3yrs old or over. It's hard to imagine much economic value left when fairly powerful machines sell for <$1000 now.
However, lease returns on systems with 12 or 24 month terms would still have pretty good resale value.
The details are still slowly coming out. It appears that this is not an extension of the DFO... I guess the 'auction' part should have been a tip off<g>.
The questions I'd like to see answered are:
1. How much refurbishing effort will be required
2. If they sell used 3d party systems, how will they refurbish these
3. What kind of warranty can be offered
4. Will they auction in quantity so med size businesses can participate or will it be piecemeal geared to the SOHO crowd
5. If auctioned in qty, are volumes sufficient to dilute new system sales with any significance.
Re: For each pc sold through the auction site, I suspect one less new pc will be sold. So, I hope Dell has done their math on this auction concept.
My concern as well now that we are talking lease returns which could
be in volume. I suspect Dell is banking on tapping into new markets and not cannibalizing current. But we really need data on the number of systems we're talking about here before making any projections.
IBM's statement has given us a clues as to what kind of profits they expect from reselling leased systems... about 125M/year. Since Dell sells more PC's than IBM, we might expect similar profits. If so, the venture would be quite worthwhile.
To take a SWAG at how many systems we might be talking here, assume lease returns of 24 months resold offer the potential for almost pure profit. Assume the ASP is $500/box and the net being $300/box. 125M divided by $300 per box is ~400k units per year. Dell will sell 12M units over the next 4 qtrs. 400k represents about 3.5% of all system sales.
It will be interesting to follow.
Re: Selling on the internet is a very low cost method of selling most products. So, why won't Dell sell the returned pc's on the net? Is an auction the best way to go?
I don't know if an auction is the best way or not... clearly they could just as easily set fixed prices.
MEATHEAD |
